Amidst all the cries of rising house prices and economic slowdown, it can be easy to fall under the illusion that Australian households are becoming worse off. However, this doesn't seem to be the case, with the inaugural SAS-NATSEM household budget report showing that standards of living rose in the December quarter last year.

The quarterly report measured cost of living, income and living standards across a wide selection of households and provides an interesting snapshot of how Australians are faring. Surprisingly, the study indicated that while the cost of living rose 1.4 per cent over 2014, household incomes surpassed this level and climbed 2.7 per cent.

As a result, the standard of living grew 1.2 per cent over the year as a whole and 0.7 per cent in the December quarter. However, the report also noted that while this is likely good news for households nationwide, living standards aren't growing quite as strongly as they were previously. For perspective, the index suggests that standards of living sprouted 58.8 per cent from the start of the index in December 1988. The average growth rate is around 1.8 per cent, which puts the most recent figure slightly behind pace.

The study also examined living standards on a state-to-state basis. It found that all states saw higher living standards over the quarter, with low living costs providing a boost to households. Western Australian and Queensland recorded the largest increases in the December quarter with 0.9 per cent growth, while New South Wales, the Northern Territory and Tasmania experienced the biggest jumps over 2014.

Interest rates also came into play over the year, but the report notes that the record lows mostly benefited high income households. Households with incomes in the top 20 per cent recorded impressive savings of $536 a year, while those in the bottom 20 per cent were better off by only $38 a year.